JNorris

Here Is an article that was just published on The Spirits Business website. American single malt: what’s the delay?

All DSP operations must happen on bonded premises, that includes bottling; so doing this in your taproom is the first issue I notice. I have spoken to the TTB about this a few times. Make sure you know the regulations and how to do this compliantly before you institute a program like this.

Have you looked at K-RAX: https://www.kraxbarrelstorage.com/

I will advise this again, be sure to use a customs broker that understands bulk spirits and the fact that you, as an importer of bulk spirits, do NOT pay excise tax on those bulk spirits at port, only customs and duty. Get this in writing from them. I have a few horror stories about this, and it was not good times. 1. You apply for an importer's permit on permits online 2. Yes, a good one that deals in bulk spirits preferably. 3. Yes on the Fed side, you need to research your particular state. There are 4 different Federal Storage reports: Domestic, Imported, Puerto Rican, and Virgin Island. You will submit your Domestic report and whichever Imported report matches the spirits you are bringing in.

Hi! I am Jennifer Norris. You might remember me from companies such as Whiskey Systems and Doc Collier Distillery. I am now running my own compliance consulting business for distilleries. I have over 20 years of experience in the wine & spirits industry with 10 of those years dedicated to distillery compliance. Dave Dunbar @dhdunbar has been a mentor to me over the years and more so since his recent retirement. He has been referring his clients to me and assisting me with some of your more interesting queries. Thank you to all who have come my way via Dave Dunbar, and many thanks to Dave for sharing his knowledge with me and also sharing it with all of you on this forum! He is a legend here. I hope to be on this forum more often answering your questions; I am not sure I can fill Dave Dunbar's shoes, but I will try. I have had the pleasure of working with many of you before and hopefully I will meet some more of you via this forum. I hope that you will reach out if you need permit assistance, internal audit assistance, TTB audit assistance, report and return clean-up, compliance training, COLAs, formulas, or if you want me to ask questions to the TTB for you so you can stay anonymous. I also teach my clients how the operational reports work and I assist them with their monthly reports as needed. I will be at ADI in Las Vegas; I will probably be the only young-ish gray, curly-haired female there, so please introduce yourself when you see me! I am here when you need me and I look forward to catching up with y'all, meeting some new people, and helping y'all stay compliant! Jennifer Norris

The regs state that they must be tested "at representative intervals." What does an interval mean to your business? I tested at the beginning, middle and end (although we only bottled less than 40 cases every time). The beginning to make sure all the fillers and the proof are within tolerance. In the middle so that you can make any necessary adjustments if needed. And at the end so that you can confirm that you have been within tolerance during the duration of your bottling. I would suggest doing more testing in the middle of you are doing larger bottlings. Really, write up a bottling fill and proof check SOP and stick to it.

@Minhwa Spirits The first place I would start with would be the state ABC and/or the DoR, or whoever handles the state excise/sales taxes. They should have the information about the rules you need to play by and the taxes you must pay. And the information is free, although it can sometimes be very hard to find someone who can answer your questions. If you do find answers, be sure to ask them to send you an email with the information so you can keep it for reference and keep their contact information, because a good/knowledgeable contact is very hard to find.

@Obtainium Getting the import permit from the TTB is the only federal license you need besides your DSP basic permit to process those bulk spirits. Once you have those, be sure to get with a good customs broker. YOU DO NOT PAY EXCISE TAX AT THE PORT FOR BULK SPIRITS. Make sure your broker understands this and get it in writing. I have seen a number of producers who import and the brokers force them to pay excise at port. Well, now you have tax-paid bulk spirits that cannot be on bonded premises and you have a good fight with the broker to get your money back.

§ 5.47a Metric standards of fill (distilled spirits bottled after December 31, 1979). (a) Authorized standards of fill. The standards of fill for distilled spirits are the following: (1) For containers other than cans described in paragraph (a)(2), of this section - 1.8 liter 1.75 liters 1.00 liter 900 milliliters 750 milliliters 720 milliliters. 700 milliliters. 500 milliliters (Authorized for bottling until June 30, 1989) 375 milliliters 200 milliliters 100 milliliters 50 milliliters (2) For metal containers which have the general shape and design of a can, which have a closure which is an integral part of the container, and which cannot be readily reclosed after opening - 355 milliliters 200 milliliters 100 milliliters 50 milliliters

It is not unusual for a new distillery to take twice as long to get going and with three times the amount of money originally thought, or I heard it all the time from my customers. There are so many details that new entrants do not consider before jumping in headfirst. Compliance is a huge one. As noted above, the snap can make your life easier for quick gauges of only alcohol and water, but cannot be used for final proofing or for obscured spirits(anything other than alcohol and water). Many do not know this. You still need to have certified hydrometers and thermometers for all of your final proofing, and really you should have 2 of each hydrometer because, trust me, they break. For obscured spirits, you need a lab still as well. I have helped a number of new distilleries with their compliance and all the little things that you should know that turn into big things like reports, records, proofing, etc. If anyone needs any help, guidance, has compliance questions, etc just send me an PM here.

I have not used CRU or CDA-USA, but I did have a Xpressfill 4 spout volumetric filler that I was very pleased with. It was affordable and worked! It replaced an enolmaster 4 spout that constantly had issues. I had 1 issue with the xpressfill and the company rushed a part out to correct the issue, so the customer service was great.

The answer from the TTB today was, we are actively working on further defining the addition of water and its effects on the rates. The 2 examples of adding water that I was given is someone proofing 190 down to 80 for bottling, or someone who proofed 190 to 81 then TIB'd it out for a bottler to add a little bit of water to get it to 80 before bottling. I take it they see a distinction between these two and the tax rates associated with the addition of water, BUT we shall see. The end result is that more information is coming...

I went back through my notes, and on 2 separate occasions the same TTB higher up has said "we have stated that even adding water will count ... as to being a processor." If the new guidance now does not include adding water to ensure label proof as a "processing" operation, I wonder what changed their minds in between then and now. I hope my interpretation of this guidance is incorrect. I believe a call to the TTB for clarification is on my to do list today. Of course, if you ask 3 different people there the same question you will, more than likely, get 3 different answers.

The "processing" changes go into effect January 2022. If it is correct that proofing is not considered processing, and that is how I took it, I wonder how many people are going to be tax paying a large number of cases to get the reduced tax rate this year. (If you do this be sure to keep your cases in a tax-paid area.) For next year, if filtering is the minimum for processing, filter your spirits. It does not specify what kind of filter, only "otherwise physically changes the distilled spirits inside the container, including filtering distilled spirits to remove material from those distilled spirits." If you have to justify the money, and you will, be sure to keep records of your filtering operations for audit purposes.

I know of some distilleries that are reusing their sample bottles as more sample bottles only, but none that are accepting bottles back from customers that I know of.

Handwriting on labels is something I warn some of my new customers about. It is easy when you are starting out but becomes a nightmare as you grow: keeping track of numbers, writing on every label, and writing legibly. My suggestion is to get with your label company; they have many different fonts and many of them look like handwriting. Ask for font samples and settle on one that you like. If it were me, I would drop the bottle numbers, as preprinted labels will undoubtedly not end up being sequential once they get on bottles. For example having to burn through 15 labels just to get your labeler to work correctly today. Maybe that is just an OCD thing though.

For anyone who wants to learn how to proof your own spirits using a lab still IM me, and I can teach you. You can spend $250- $500 on a lab still and learn how to do it yourself or pay a lab to do it for you every time. Labs are charging....$90-$120 for a proofing test, ONE proofing test. (Dang, I remember when this was $30!!! ...it looks like I am in the wrong business, maybe I should start a lab for testing/proofing spirits.) Oh and you have to pay shipping. AND you have to proof your spirits before you bottle, so a sample from every batch would need to be sent to a lab for proof testing before you could bottle. You can see how the costs will add up quickly.

Thatch - If you still need some help, shoot me an email and I will try to help you with your reports. No sales pitch, just a little assistance.

I mentioned in another post that the TTB was looking at ages in barrels for the new regulations. Here is the TTB response to the proposed regulation: 8. AGE STATEMENTS In Notice No. 176, TTB proposed to incorporate its current policy that only the time in a first oak barrel counts towards the “age” of a distilled spirit. That is, if spirits are aged in more than one oak barrel (for example, if a whisky is aged 2 years in a new charred oak barrel and then placed into a second new charred oak barrel for an additional 6 months), only the time spent in the first barrel is counted in the “age” statement on the label. (See proposed § 5.74(a)(3).) TTB received approximately 50 comments in opposition to the proposal. For example, St. George Spirits stated, “We believe that all time spent in a barrel should be counted towards the spirit's age statement—regardless of movement between barrels.” The Beverage Alcohol Coalition, a coalition of domestic and international distilled spirits industry groups, stated, “It is a common practice for many distilled spirits products, including Scotch Whisky, to mature in more than one type of cask. As proposed, the rule would mean whiskies matured in more than one cask, could not state the full time the product spent maturing, even if the second cask complies with class/type requirements.” Five commenters suggested that if multiple barrels are used, the label should contain an optional or mandatory disclosure of that fact. TTB also received 17 comments supportive of the provision in proposed § 5.74 to eliminate the prohibition on age statements on many classes of distilled spirits, including gin, liqueurs, cordials, cocktails, highballs, bitters, flavored brandy, flavored gin, flavored rum, flavored vodka, flavored whisky, and specialties. Some of the comments specifically noted that they are supportive of expanding the permissibility of an age statement to gin. Three commenters stated that age statements should be permitted on all distilled spirits, including vodka. TTB RESPONSE After reviewing the comments, TTB agrees that all the time spent in all oak containers should count towards the age statement. TTB notes that where a standard of identity requires aging in a particular kind of barrel, such as straight whisky, which requires aging two years in a new charred oak container, that aging must take place in that specified container type before being transferred to another vessel. TTB is amending existing § 5.40(a)(1) regarding statements of age for whisky that does not contain neutral spirits to provide that multiple barrels may be used and to provide that the label may optionally include information about the types of oak containers used. This does not affect current requirements to disclose aging in reused cooperage under 27 CFR 5.40(a)(4). TTB believes that the contemporary consumer understands the meaning of age statements and that there is consumer interest for innovative products such as aged gin. As a result, TTB is amending the regulations in current § 5.40(d) to allow age statements on all distilled spirits except for neutral spirits (other than grain spirits). Because neutral spirits and vodka are intended to be neutral, spirits that are aged would not meet the standard to be labeled as neutral spirits or vodka. A spirit that would otherwise be a neutral spirit but is aged would qualify for the designation “grain spirits,” which may bear age statements as provided in current § 5.40(c).

Taxes are realized when the bottled product leaves your DSP. As far as your reports go, you should be filing operations reports and excise reports from the day you received your DSP permit from the Feds, even if they are zeros.

To be clear, a lot of wine is made with added sugar. Good wine is not made with added sugar.

Jon - I talk to new distillers all the time about what they should be doing at their distillery. Send me an IM if you have time. To anyone else, I am here to help, send me an IM if you want to talk obscuration, TTB compliance, etc.

I bought a Master Distillation kit from Pellet Labs: https://pelletlab.com/product/master-distillers-1000ml-distillation-kit/ I have sent so many of my distillers to them that I should be getting some sort of commission, but alas, no. You can also find them on Amazon with free shipping, if you are lucky. You do not need an Anton Paar, the gauging manuals are based on thermometer and hydrometer measurements. Buy a calibrated thermometer and calibrated hydrometers and LEARN HOW TO USE THEM CORRECTLY! Here is a video from Rudolph here as well as the instructions written out on how to to use a distillation apparatus: https://rudolphresearch.com/videos/distillation-obscured-alcohol-products/ BDAS is who I used for samples testing: https://bdastesting.com/ but find someone close to you as you have to pay to ship off your samples. Jennifer

I have done this and seen it done in other distilleries as well. You must have a formula and have label details as to what is in the bottle. You have to be very explicit in your method of manufacture on your formula as to what you are doing to make sure they give you an accurate qualification. My label ended up stating 375mL of whatever spirit, and 375mL of whatever fruit. Be aware this is a 750mL bottle, but only 375mL of taxable alcohol. There are a number of other current COLAs available on the public registry that you can look through for reference, but just because they are approved, does not mean they are accurate. FYI, I did not do this with whiskey.